Applying for Car Loans and Things to Watch Out For

When you’re shopping around for the right vehicle loan, make sure you apply to several different lenders.  The car dealership, local banks and credit unions, as well as other lenders, often run specials to those who need financing on car loans, so it pays to contact several different sources in an attempt to get the better deal.


This does create a bit of paperwork for you to fill out, which means you’ll need to know some bits of specific information.  These include details like your income and employment information, as well as your monthly expenses like mortgage and credit card payments, and even student loans.  Of course you’ll also need to know your personal identifying information. At first this may seem very tedious, but after you’ve completed one or two applications, you’ll have the process and the necessary information down.


Keep in mind that if you delay, or spread out the applications through these various institutions, you have a chance of lowering your credit score.  Typically, when one creates multiple financing applications, it will do that.  But if you do your applications around the same time period, the credit bureaus will see that you’re shopping around and your credit score won’t lower.


It’s important to be honest when you complete your credit applications for car loans.  You should never misstate your income or your expenses and debt.  Everything you state on a loan application is verified, so if you exaggerate a little here and there, you will be caught.  Your potential lender decides if they will provide you with a car loan based on this critical information, so honesty is always the best policy.


As you shop around for lenders, take the time to really compare their different offers.  Most car shoppers immediately look first to interest rates, but there are a few other things you should be aware of, as well.  Some offers charge a lot of fees, so read terms carefully and avoid those that charge you fees, even if they may tout great interest rates.  The term of car loans is important to look at, as well.  A longer term will often give you a lower monthly payment, but you will also pay more in interest.  Also may sure that if you decide you might be able to pay your car off earlier than expected that the terms of your loan don’t penalize you for early pay-off.

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